The Ethereum market initially tried to rally but gave back early gains as we continue to hang about the $2800 level. The previous candlestick was a hammer, and the fact that we are trying to form a bit of a shooting star suggests that the market is bouncing around in this area and trying to form a very short-term consolidation range.
Eventually, we will break out of this short-term range and determine the next direction, but at this point, I think it is very likely that we need to see an impulsive candlestick to tell us which direction we want to go. If we go to the upside, the $3000 level would be the initial target, where we have the 50-day EMA as well. The large, round, psychologically significant figure will attract a certain amount of attention regardless, and then on top of that, we have the 200-day EMA.
On the other side of the trade, if we were to break down below the hammer for the Monday session, it opens up the possibility of a move down to the $2750 level, and then down to the $2500 level. The $2500 level is an area where we have seen a lot of support previously, so I would assume that it is only a matter of time before buyers would try to support Ethereum in that general vicinity. Breaking down below the $2500 level could open up a new flood of selling pressure, probably moving right along with Bitcoin and other crypto markets.
I do think at the very least we are going to see a lot of choppy behavior, so I would be somewhat cautious about my position size, but once the market starts the move for a bigger rally or breakdown, then we can start to put more money to work. Ultimately, I think that the Ethereum market will continue to struggle right along with Bitcoin, but I do think that eventually we may see a little bit of support. The question is at this point whether or not we are going to do it here, or if we need to fall further to find it. If you are a longer-term believer in Ethereum, then this could end up being a bit of a value play on dips.
